The structures of the EU and Eurozone have allowed the creation of a series of supranational entities that have taken on debts whilst having little financial strength of their own: their creditworthiness depends on guarantees or capital calls from member states, without the extent of the member states' liabilities being transparent and being added to their own direct debts.
The risks to member states created by EU supranationals are laid out in the newly-released book 'The shadow liabilities of EU Member States, and the threat they pose to global financial stability', written by Bob Lyddon and published by The Bruges Group.
The European Union entity had, at the end of 2021, €174.8 billion of debts for which the member states were responsible, of which less than half was attributable to the €750 billion Coronavirus Recovery Fund. In due course the Fund will become drawn and the whole drawn amount will be an EU debt that the member states underwrite. Currently the larger, undrawn portion still sits within the €792.7 billion for which the member states have a contingent liability.
In addition to the EU's debt, there are the debts within the TARGET2 payment system, which were reported by the ECB as being €1.8 trillion: €1.5 trillion owed by Eurozone national central banks and €0.3 trillion owed by the ECB itself.11 This €335 billion can be considered as sitting within the member states' risk for recapitalizing the ECB